U.S. Should Hedge China-Myanmar Relationship

As Myanmar gradually opens to the international community, the United States should remain cautious and hedge due to the role of China in the country.

Policy Issue

Myanmar, located at the crossroads of East, South and Southeast Asia and between the world’s two most populated countries, is of clear geostrategic significance. The rise of China has only made Myanmar more vital. China and Myanmar have a longstanding relationship, with the PRC having recognized and assisted the pariah state while the United States was leading the world away from Myanmar. Given the strategic relevance of these actors, it is important that the United States shape the China-Myanmar relationship to the advantage of U.S. interests.

Chinese Interests and Challenges in Myanmar

China has three principal strategic interests in Myanmar: energy procurement and security, access to the Indian Ocean, and security of border trade. China has pursued the transportation of crude oil and natural gas via pipeline and the building of hydroelectric power plants in the border area. For the landlocked Yunnan Province on the China-Myanmar border, securing access to the Indian Ocean through Myanmar as a land bridge is important for the acquisition of trade routes as well as security. Myanmar is Yunnan’s biggest trading partner, and China-Myanmar trade is also a Myanmar’s logistical artery. China’s exports to Myanmar were +39% year-on-year in 2011, while China’s imports from Myanmar were +75% year-on-year in 2011.

Several challenges to China-Myanmar relations have emerged which stand to impact Chinese interests. Negative images of China have developed among the people in Myanmar, as the Chinese government supported the military government of Myanmar and Chinese companies are believed to have exploited Myanmar’s natural resources. China stands to be affected by struggles between the Myanmar Armed Forces and rebels on the border, which China formerly supported. The preliminary success of Burma’s democratic transition has raised questions about China’s own political system and long-postponed reforms. Growing intimacy between the Thein Sein administration and the U.S. government is resulting in sentiments of strategic insecurity.

The Strategic Importance of the China-Myanmar Relationship to U.S. Interests

U.S. interests, defined as security, economic growth, universal values, and international cooperation by the 2010 U.S. National Security Strategy, provide the lens through which to view the China-Myanmar relationship. Myanmar has the potential to serve as a major new market; stands as a potential partner on China’s doorstep amidst growing security concerns; serves as an opportunity for the United States to support universal liberal values; and, through increased global interest, provides an opportunity for international cooperation. The United States must promote a China-Myanmar relationship which best assures the maintenance of these interests.

Policy Options for the China-Myanmar Relationship

Contain-Limit China-Myanmar Partnership: This position asserts that the United States has the upper hand and strong potential for developing a unique relationship with Myanmar. The limiting of the China-Myanmar partnership can then be utilized to better pursue U.S. interests. The United States can leverage frustrations with China, increased investment and support of Myanmar’s emerging democracy to bring Myanmar under its political wing. The potential positive impact extends beyond Myanmar to the United States strategic position.

Caution-Defer to China-Myanmar Partnership: This position asserts that China has the upper hand and greater potential for maintaining a unique relationship with Myanmar. It could direct large amounts of investment into Myanmar via the state, leveraging Myanmar to temper its relationship with the United States. China could also utilize conflict on the China-Myanmar border to decrease security and discourage U.S. involvement and investment. The United States may avoid potential repercussions by allowing the traditional alliance.

Hedge-Promote Myanmar’s Neutrality toward China and the United States: This position asserts that while it is not in U.S. strategic interests for Myanmar to be an ally of China, per the concept of security dilemma it is also not in U.S. interests for Myanmar to antagonize China. U.S. relations with China, as well as Myanmar’s relations with the United States and China, should not be perceived as a zero-sum game. It is in part China’s zero-sum policies that have strained its relations with Myanmar, and as such the United States must not repeat China’s mistake by keeping Myanmar on a chain. Economic interconnectivity between all China, Myanmar, and the United States can moderate relations per interdependence theory.

Recommended Policy: Hedge

The “Contain” and “Caution” positions understate the continued strength and importance of the China-Myanmar economic relationship, with China remaining Myanmar’s largest trade and investment partner. In 2012 two-way trade grew 46% over the previous year, to $6.5 billion, while China’s cumulative investments in Myanmar reached $14 billion. Of the $900 million Myanmar’s government is set to borrow this year, China will provide $527 million. Given China’s continued importance, the United States has not developed the capacity to cut China-Myanmar ties. Conversely, the United States should not feel forced to defer to China as it is not likely to risk its position of relative strength through an overly aggressive response. The “Contain” and “Caution” positions thus represent overaggressive or overpassive options, and have the potential to provoke a security dilemma. Ultimately then, the United States should hedge by promoting a policy of neutrality between Myanmar and China. Although China will face increased competition, a policy of neutrality will allow all actors to pursue their economic interests while increasing the likelihood of maintaining the United States’ interests in security, international cooperation, and democratic growth. This policy of neutrality, while potentially controversial to China, can be softened through the application of trilateral U.S.-China-Myanmar consultations and the promotion of policies in Myanmar which limit the threat potential.

About Author

Taylor is a participant in the Government of Japan-administered Japan Exchange and Teaching (JET) Program. Previously, Taylor worked for the Office of the Senior Vice President for Asia and Japan Chair at the Center for Strategic and International Studies (CSIS). He graduated magna cum laude graduate of Georgetown University’s Edmund A. Walsh School of Foreign Service.